Texas investigates 'soft money' ties to GOP leader

By Scott Gold
Los Angeles Times

	KEN LAMBERT / AP Congressman Tom DeLay, R-Texas, is linked to Republican activists' fund-raising efforts now under investigation in his home state.
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The probe is focused on several political and fund-raising organizations run by Republican activists, investigators said. One organization, the political-action committee Texans for a Republican Majority, has direct ties to DeLay, a Texas Republican and one of Washington's most powerful politicians.

At issue is whether the organizations improperly used corporate contributions to help finance the campaigns of more than 20 GOP candidates for the Texas House in 2002, according to documents and interviews with prosecutors and government investigators.

Many campaign-finance watchdog organizations believe the investigation is a test of whether "soft money" — unlimited contributions from corporations, unions and wealthy individuals — began playing a more direct role in state and local elections.

Such donations were outlawed at the national level by a campaign-finance reform law, recently upheld by the Supreme Court, but the measure does not ban contributions at the state level. Reform advocates worry that soft-money donors will begin contributing at the state level to curry favor and advance their causes.

Texas law bans corporations from contributing money to candidates for office. Corporations are allowed to fund many ancillary costs of a political campaign, such as office rental or telephone lines, and in many cases are allowed to educate voters through advertisements and other programs, provided they do not specifically advocate a candidate's defeat.

Texans for a Republican Majority is an offshoot of DeLay's Americans for a Republican Majority, created in 1994 to elect conservatives to public office. The Texas group was created in 2001, with the 2002 elections in mind, using seed money from Americans for a Republican Majority.

Investigators said they suspect that the Texas group spent hundreds of thousands of dollars on telephone banks and other initiatives during the election — projects, they said, that went beyond the administrative costs that corporations are allowed to fund in Texas elections. The money, in effect, represented a direct contribution to candidates, they argue.

DeLay, whose office did not respond to requests for interviews, long has been viewed as one of the most innovative and prodigious fund-raisers in politics. He has not been accused personally of any campaign-finance violations.

Republican leaders said they worked with attorneys who specialize in election law to ensure that their corporate money was used legally. They denied wrongdoing and note that the force behind the investigation, Travis County (Texas) District Attorney Ronnie Earle, is a Democrat. They said the investigation — and two lawsuits containing similar allegations, brought by five Democrats who lost in the 2002 election — represent sour grapes.

"I think it is definitely politically motivated. And I think it is without merit," said Bill Hammond, president of the Texas Association of Business and a former Republican member of the Texas House.

Hammond's business and lobbying organization, based in Austin and known as TAB, is another focus of the investigation. According to TAB's newsletter, it spent nearly $2 million to mail Texas voters 4 million advertisements that attacked Democratic candidates and supported Republicans.

Sources close to the investigation said that as many as 20 people, including several of Austin's power brokers, have appeared before two grand juries as prosecutors push for indictments. The sources said at least two people, including the former director of Texans for a Republican Majority, John Colyandro, have been granted limited immunity in exchange for testimony.

Colyandro did not return a phone call seeking comment.

Almost all the candidates supported by the organizations won their races in the 2002 election, a turning point in Texas. According to documents distributed among Republican activists and gathered by investigators, several candidates say they would not have won without advertisements produced by Hammond's organization.

The election gave Republicans their first majority in the House in 130 years. That paved the way for a host of initiatives favored by conservative advocates. The Legislature, for example, this year set limits on lawsuits brought by consumers against manufacturers and health-care companies, passed abortion restrictions and, most controversially, redrew congressional districts in Texas.

The new congressional maps are expected to hand the Republican Party as many as seven new seats in Congress, shoring up its hold on power in Washington.

If the Republican activists behind the financing in Texas are vindicated, and they say they will be, they have suggested that similar arrangements can, and should, be used in local elections elsewhere.

Political activists have attempted similar money arrangements in other states, such as Wisconsin, according to campaign-finance reformers. Nowhere, however, have those efforts been as widespread and disciplined as they were in Texas during the past election cycle, several reform advocates said.

"We've never seen this before," said Fred Lewis, director of the Austin-based watchdog group Campaigns for People, which works to reduce the influence of money on state government. "The level and the impact of it were profound."

If the Texas financing is upheld as proper and legal, "it would essentially allow very powerful financial entities, corporations being the biggest, to have a tremendous impact on (local) elections," said Nick Nyhart, executive director of Washington-based Public Campaign, a national nonprofit campaign-finance reform group that works to support public financing of elections. "It means we get a government that isn't serving the interest of the people, but special interests."

Earle, who has been in office for 27 years, said he is aware of claims that the probe is motivated by partisan politics. But he said he has brought charges against 15 politicians over the years: Eleven of them, he said, were Democrats.

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